As anyone
who's been following Nokia's descent knows, the Finnish mobile manufacturer is
in trouble. Finally, executives at Nokia are admitting it and are making
efforts -- a little late in the game, true -- to do something about it.

Yesterday,
we reported Nokia CEO Stephen Elop's message to his employees in a memo: The
company is "standing on a burning platform" and must change course.
"Android came on the scene just over 2 years ago, and this week they took
our leadership position in smartphone volumes. Unbelievable." he wrote.

Today's
Nokia news suggests that the company might be acting on those strong statements.
According to a Bloomberg Businessnews report, Nokia
might be close to a software partnership with Microsoft. Elop, a former Microsoft executive himself, has met with
Microsoft CEO Steve Ballmer to discuss the possibility of powering Nokia
smartphones with Microsoft's Windows Phone 7 mobile software, an unidentified
source said. Elop has also held talks with Google CEO Eric Schmidt, but those
discussions are not likely to lead to a partnership with Android.

A
possible deal -- rumors of which we reported on all the way back in December
-- could be likened to a late-game Hail Mary pass, but it could benefit both
companies. Nokia, the longtime leader in the worldwide mobile market, has been
back and forth with its plans to unleash its new mobile OS, MeeGo. The new OS
was supposed to replace Symbian -- until recently, the most widely used mobile OS in
the world -- on all of its smartphone devices. But Elop pushed its launch back
to 2011. And while Nokia is still the world's largest mobile phone vendor, it's market share dropped from 36.4 percent
in 2009 to 28.9 percent last year.

Microsoft,
too, could benefit from a deal. Despite launching a revamped mobile OS with
WP7, its stock has remained relatively flat. It moved 2 million licenses for WP7 in the last
quarter of 2010 -- not enough to trigger a turnaround. But Nokia still claims
37.6 percent of smartphone sales, according to Gartner, potentially opening up
the playing field for Microsoft.

One thing
Nokia doesn't want to do is adopt the strategy of HTC, Samsung, and Motorola.
That is, Nokia refuses to simply license Android from Google for its own
devices -- a move a former Nokia exec once likened to "peeing your pants to stay warm". Rather,
Nokia is aiming to forge a "strategic alliance" with a software
company.

"We
need an attitudinal shift," Elop said last month, according to BusinessWeek.
"We must improve the quality of our execution, accelerate the speed at which
we execute, and enhance the effectiveness of our partnerships."

The
changes Elop wants to implement could also mean additional changes to its
executive leadership. The company's top executive losses have been well
documented here on DailyTech and elsewhere, but a necessary
"attitudinal shift" at Nokia may require additional shakeups.

"Stephen
Elop does realize what the problems are, but the question is whether there is a
credible strategy and whether they can execute it without compromising their
existing sales," Stuart O’Gorman, an investor at Henderson Global
Investing Ltd., told BusinessWeek. "They’ve done the easy
step that previous management didn’t take, which is realizing the problem. The
harder steps are still to come."

"It's okay. The scenarios aren't that clear. But it's good looking. [Steve Jobs] does good design, and [the iPad] is absolutely a good example of that." -- Bill Gates on the Apple iPad